The European Commission has launched another investigation into UK state aid for a coal-to-biomass plant conversion project.
Following February’s investigation into the 420 MW Lynemouth plant, government aid for which was approved in December, this week the Commission opened a case on the planned conversion of the UK’s largest power plant, the 39.6 GW Drax in North Yorkshire, which contributes around 8 per cent of the nation's power.
The UK plans to close all of its coal-fired power plants by 2025 and has offered incentive for conversion in the form of a set strike price for power of £105 ($154)/MWh - well above the current day-ahead market price of £37/MWh.
The investigation aims to discover whether this promised aid violates European state aid regulations.
These rules “make sure that the cost of such support for consumers is limited and does not give certain operators an unfair advantage over competitors," the Commission said in a statement, adding that it aims to ensure that UK government aid is “limited to what is necessary” and will not distort the biomass market.
The Drax plant has been capable of co-firing with biomass since 2004, and two of its six units are now 100 per cent biomass-fueled. Operator the Drax Group has stated that while conversion of another unit is 85 per cent complete, government aid is needed to finish the process.